Companies such as Facebook and Google are showing a growing interest in purchasing Twitter with an estimated valuation of $8bn to $10bn.
According to a report from the Wall Street Journal, Google Inc, Facebook Inc and other companies have held meetings with Twitter, discussing the possible acquisition of the company. The company had estimated revenue of $100m and $110m in 2011. Twitter only made revenue of $45m in 2010 due to expenditure on hiring and data centre.
Co-founder of Twitter, Evan Williams, and Dick Costolo, the chief executive, have both previously sold companies to Google.
A Twitter spokesman however, refused to discuss its finances or the valuations and interest by other companies. Google and Facebook also remained quiet on the subject.
Twitter, which was created in 2006, has 200m users and only introduced advertising last year. Promoted Trends, a new Twitter ad service, has been selling out its inventory every day.
Ethan Kurzweil of venture capital firm Bessemer Venture Partners stated, “Are these prices justifiable based on financial multiples? No.”
He also added, “But these start-ups are building social services and have lots of data about their users” and “the market is valuing that mightily right now.”
Public offering has become increasing popular, with the internet music service Pandora Media Inc planning a $100m public offering. These high valuations have sparked other start-ups to explore public offerings.
The recent offering of $315m by AOL to purchase The Huffington Post, along with the previous successes of online start-ups such as Facebook and Groupon Inc, have given hope to Twitter, with hopes of transforming into a $100bn company.
Debra Aho Williamson, an eMarketer analyst, commented on Twitter’s success with advertising.
“The company is having great ad-sales momentum right now, but we still think they need to do something big to increase usage and get more people seeing and interacting with tweets.
“Most of their advertisers are just experimenting at this point; the challenge will be to get those advertisers to come back and buy more,” she said.